JOBS REPORT PAINTS DREARY PICTURE

Employers added just 88,000 jobs last month

WASHINGTON 
U.S. employers added just 88,000 jobs in March, the fewest in nine months and a sharp retreat after a period of strong hiring. The slowdown may signal that the economy is heading into a weak spring.

The Labor Department said Friday that the unemployment rate dipped to 7.6 percent, the lowest in four years, from 7.7 percent. But the rate fell only because more people stopped looking for work. People who are out of work are no longer counted as unemployed once they stop looking for a job.

The percentage of working-age Americans with a job or looking for one fell to 63.3 percent in March, the lowest such figure in nearly 34 years.

Stocks plummeted after the report but narrowed their losses later in the day. The Dow Jones industrial average closed down about 41 points. Broader indexes also declined.

March’s job gain was less than half the average of 196,000 jobs in the previous six months. The government said hiring was even stronger in January and February than previously estimated. January job growth was revised up from 119,000 to 148,000. February was revised from 236,000 to 268,000.

Several industries cut back sharply on hiring. Retailers cut 24,000 jobs in March after averaging 32,000 in the previous three months. Manufacturers cut 3,000 jobs after adding 19,000 in February. Financial services shed 2,000.

Some economists said retailers might have held back on hiring because March was colder than normal. That likely meant that Americans bought fewer spring clothes and less garden equipment. Clothing stores shed 15,000 jobs, and building material and garden supply stores shed 10,000.

The weak jobs report nationally could bleed over into San Diego County when local figures are released later this month, economists said.

In February, local employers added 9,800 people to their payrolls, the biggest jump from a January since 2002. The local jobless rate dropped to 8 percent, its lowest since it was 7.4 percent in December 2008.

“There is a little bit of concern that we could see weak numbers locally in March,” said Alan Gin, economist at the University of San Diego. “One of the big cutbacks nationally was retail. We could be seeing the impacts of the payroll tax going up and taking some of the buying power out people’s pockets.”

The employee payroll withholding for Social Security was reduced from 6.2 percent to 4.2 percent the past two years as part of federal economic stimulus efforts. That tax break expired in January.

Another potential drag on the economy is sequestration, the across-the-board federal spending cuts that began March 1. Nationally, direct federal employment fell by 7,000 — too small an amount to impact the overall employment numbers.

Many economists say the cuts could slow growth in the spring and summer. But private companies that contract with the government are likely to be cautious about hiring already, said Marney Cox, chief economist with the San Diego Association of Governments.

“If you take a look at a couple of areas specific to defense, we have already started to notice some weakness in those areas related to civilian defense jobs,” he said.

Local construction hiring also lags the rest of the nation, in part because San Diego isn’t benefiting from rebuilding efforts in the wake of Hurricane Sandy. And some of the better-than-expected local job numbers in January and February may be linked to companies rebuilding inventories that dwindled toward the end of last year.

Tourism hiring, however, has been strong locally. It may offset declines in retail and defense-related jobs, economists said. State officials recently increased San Diego County job growth for 2012 from around 20,000 to more than 25,000, Cox said.

“San Diego’s growth seemed to outpace the nation’s, and we know construction wasn’t the major contributor,” he said. “The visitor industry, on the other hand, appears to be doing well. That was one of the bright spots for San Diego.”

In March, average national hourly pay rose a penny, the smallest gain in five months. Average pay is just 1.8 percent higher than a year earlier, trailing the pace of inflation, which rose 2 percent in the past 12 months.

The Labor Department uses a survey of mostly large businesses and government agencies to determine how many jobs are added or lost each month. That’s the survey that produced the gain of 88,000 jobs for March.

The government uses a separate survey of households to calculate the unemployment rate. This survey found that the number of people either working or looking for work fell by nearly 500,000. It was the sharpest such drop since December 2010. And the number of Americans who said they were employed dropped nearly 210,000.

The percentage of working-age adults in the labor force is a figure that economists call the participation rate. At 63.3 percent, it’s the lowest since 1979. Normally during an economic recovery, an expanding economy lures job seekers back into the labor market. This time, many have stayed on the sidelines, and more have joined them.

This could be the fourth straight year that the economy and hiring have shown strength in the winter and early spring, only to weaken afterward. Last year, for example, job gains averaged 262,000 a month in the January-March quarter, but then fell to a pace of 108,000 in the April-June quarter.

“The recovery has been playing out weakly, there is no doubt about it,” said Tony Cherin, San Diego State University finance professor emeritus. “At the same time, I’m more optimistic than pessimistic, and my reasoning behind that is essentially based on what the Federal Reserve is doing in trying to promote growth in our economy.”

Sluggish hiring could embolden the Fed to keep borrowing costs low for the long run. The central bank has said it plans to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent — and Chairman Ben Bernanke has said a 6.5 percent rate is a threshold, not a “trigger,” for any rate increase. The Fed wants to see sustained improvement in the job market.